Bank Forgives Dead Student's Loan; Family Fights to Change Law

April 27, 2012

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The family contacted members of the House and Senate beginning in May 2009, and the late Rep. John Adler, D-N.J., responded and introduced the Christopher Bryski Student Loan Protection Act in 2010 before he lost his bid for re-election and died in April 2011. Although the bill, which requires private lenders to clearly explain the responsibilities of co-signers in the event of death or disability, passed the house unanimously, it did not make it to a Senate vote before the end of the congressional session. The bill has been taken up by Sen. Frank Lautenberg, D-N.J., and Rep. John Runyan, R-N.J.

Bryski said his family was "very grateful" for Runyan's and Lautenberg's work for his brother's bill, but he also hoped the new Consumer Financial Protection Bureau, the federal agency created under the Dodd-Frank Act that began operating in July 2011, would step in to regulate three other areas not addressed in the bill. If left unregulated, Bryski told the CFPB these areas would "continue to place families and individuals in terribly vulnerable financial and legal situations."

One of these areas is the current inability of co-signers to consolidate the private student loans of an original borrower who has died or become disabled.

Bryski also hoped that private education lenders would be required to provide protection against the unconditional repayment of, or to forgive, private student loans, which is the policy of federal lenders such as Sallie Mae.

He also hoped families could be informed as to whether they are required to continue paying credit card payments in the event of a death of disability of the original borrower. He said he hoped credit card companies would be required by law to close a borrower's account upon receipt of permanent disability certification or death.

"Throughout our ordeal, regardless of physician justification letters or pleas for reprieve, [two] banks hounded our family for payment, regardless of the traumatic situation at hand," Bryski wrote to the CFPB.

"Having received proof of his incapacitation and death, they didn't get it," Bryski told ABC News, referring to his brother's creditors. "[Christopher] couldn't even talk. It's just unfortunate."

Rohit Chopra, Student Loan Ombudsman at the Consumer Financial Protection Bureau, can assist those with private student loans, whereas previously, those borrowers did not have a central agency to contact.

"Many believe that private student loans have the same consumer protections that federal student loans offer," he said. "We often hear about this misunderstanding and its negative impact on student loan borrowers.:"

Consumers can contact the CFPB for assistance either by calling toll-free or (855) 411-2372 by visiting www.consumerfinance.gov

The Consumer Financial Protection Bureau and the Department of Education will release a report on private student loans this summer that will discuss many of these consumer protection issues.

"In most cases, if someone dies with credit card debt, the only people who are directly legally responsible for that debt are cosigners or, in certain states, spouses," Detwiler said. "But if there is not someone who is responsible for the debt, the creditor will want to find out whether is there an estate from which they can collect. And that's where it gets tricky. That can be situational, and vary by state."

Often, family members don't know whether the creditor can try to collect from money or assets, or even a life insurance policy, left by the deceased, she said.

"Creditors want consumers to buy credit protection plans that would typically wipe out the debt in the case of death or permanent disability, but that may not be necessary," she said. "Family members may not even be responsible and there may not be an estate from which to collect."